SCA acquires hygiene companies in Australia and New Zealand
As part of SCA´s plan to successively globalize its hygiene products
operations, it today acquired the leading tissue company on the
Australian and New Zealand markets.
SCA has acquired the tissue and fluff operations of the New Zealand
company Carter Holt Harvey for a purchase price on a debt-free basis of
SEK 5 billion (AUD 890 M). The purchase price also includes acquisition
of the seller´s 50% interest in Sancella, a company owned jointly with
SCA. The combined business has operations in Australia as well as New
Zealand, and in 2003 posted sales of about SEK 3.7 billion. After the
acquisition, SCA´s sales outside Europe in the hygiene products area
will amount to about 30%, of which SCA Hygiene Growth Markets accounts
for about 15%.
The value of the combined tissue markets in Australia and New Zealand
amounts to nearly SEK 9 billion, of which 72% is attributable to
consumer tissue and 28% to products for the AFH market. Market growth
during the past ten years amounts to about 3% annually. The tissue
production capacity of the acquired units is 130,000 tons, of which
30,000 tons is TAD (Through Air Dried) grade. A substantial portion of
fiber raw material is secured from the acquired unit's own production
unit for CTMP pulp with a capacity of 50,000 tons. All production is
converted in the businesses´ own facilities and sales are made under its
own brands. The company is the market leader in tissue in Australia
(35%) and New Zealand (63%). The company´s Sorbent and Purex brands have
built up a strong market position over the 50 years they have operated
in Australia and New Zealand. With regard to baby diapers, production
and sales are carried out in New Zealand, where the market share is 56%.
The value of Australia and New Zealand´s combined baby diaper markets
amounts to SEK 3.3 billion, with New Zealand accounting for SEK 0.5
Sancella was established 25 years ago as a joint venture for the markets
in Australia and New Zealand, at that time with Bowater-Scott as
partner. Today, the company produces feminine hygiene and incontinence
products. In the feminine hygiene market Sancella has a 37% market share
in Australia and a 30% market share in New Zealand. In the incontinence
area, the company is the market leader in Australia, with a market share
of 45%, while in New Zealand it is ranked second. All Sancella´s sales
go through a combined organisation together with the tissue operations.
In order to increase overall competitiveness and profitability, SCA will
continue the current business focus on increasing efficiency and with
the support of technology transfer from the Group's other tissue
operations to intensify efforts within product development. The total
purchase price corresponds to 8.4 times operating surplus (EBITDA),
based on earnings in 2003. The acquisition is estimated to yield a CVA
index of about 1.2 and as a result exceeds SCA´s yield requirement by at
least 20%. The transaction is considered to have a marginal positive
effect on the Group´s earnings per share during the first 12 months. The
Group´s long term goal for cash flow from current operations is expected
to increase by SEK 2 per share, corresponding to an increase of 5% based
on the assumptions of a dept/equity ratio of 0.7 (the goal for SCAs
dept/equity ratio). The preliminary acquisition balance indicates that
the goodwill will amount to about SEK 2 billion. The acquisition
requires approval by the relevant authorities in Australia and New
Zealand and is expected to be completed in mid May.
Don Matthews, currently head of the acquired business, will continue to
lead the operations and remain based in Melbourne, Australia. He will
report to Scott Jungles, President of SCA Hygiene Growth Markets.
Stockholm 25 March 2004
SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ)
Communications and Investor Relations
For further information, please contact:
Jan Åström, President and CEO. Phone +46 70-586 07 01.
Michael Bertorp, Executive Vice President. Phone +46 70-590 51 22.
Peter Nyquist, Senior Vice President Communications and Investor
Phone +46 70-575 29 06.
Due to this acquisition a telephone conference will be held on 25 March
2004, at 15:00 CET. To participate, please call the number below at
least 5 minutes prior to the conference call.
The slide presentation will be available at www.sca.com.
Dial-in number UK: +44 (0) 207 162 0182
Dial-in number US: +1 334 420 4950
Dial-in number Sweden: +46 (0) 850 520 114
Dial-in number Australia and New Zealand: +613 9221 4420
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